Home Buying in Riverside>Question Details

Mike, Home Buyer in Riverside, CA

divulging information on current offers?

Asked by Mike, Riverside, CA Sat Apr 25, 2009

I have made an offer on a bank owned property (or maybe it was a short sale, I don’t remember now). Before making the offer my agent told me that the listing agent told him/her that there are already offers at the full price or even higher. I made an offer that was higher than the listed price, hoping to get the property. Few days later the agent told me that our offer is not the highest and suggested to make a higher offer that I made. Eventually, our offer was not accepted because another offer was higher (and in cash).

My question: is the listed agent allows to share information with another agent as to the current offers? I trust my agent that the information he/she provided is accurate, however, I believe that the listing agent by divulging information is creating a competition between buyers and consequently contribute to higher prices. Is this practice common? (is it legal?)

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Mike, if you are in a competitive bid situation on a property, I can assure you that your agent was trying to get the dollars too. This is common. Its hard when you dont get the house, but in fact, the listing agent is REQUIRED to work for the seller ONLY. Therefore, bidding up the property is their job. YOUR AGENTS job is to know how to bid on the properties. If it is you who sets the price, then the agent should advise you of the competition and show you the local comps, both pending sales and sold homes. You can see what others see and know a good deal when you have it. We are seeing homes sell for more than asking price in the county due to the competition level. Interest rates are good and buyers are shopping. If you are not satisfied with your agents performance, you may request to opt out. If you are just learning the ropes of bidding, then listen to your agent and if she/he is "on top of the game", it wont be long before you land the deal! Good luck and many blessings to you! http://www.DIALdani.com
1 vote Thank Flag Link Tue Apr 28, 2009
I don't think it is illegal per se, but I can tell you that inexperienced agents do tend to spill a little more than they should. Generally, we're not supposed to divulge at what the other offers came in, but it happens. Especially if the other offers are higher. Good luck getting them to spill if it is a lot lower than asking. The listing agent has a fiduciary to his/her client, and if divulging some info is in the client's best interest, albeit not entirely ethical, it can be argued that by doing so, the agent is fulfilling his/her fiduciary duty.

Most of the time, if you're the buyer, and the listing agent tells your agent information about the other offers, it's a good thing for you. You get to know if you will even be in the running. It's bad for the existing offers, because you may come in higher than them and that's an "unfair" advantage.

But most likely in your situation, they are creating an auction affect and playing the offers off of each other to secure the higher price for the seller. But that can only take them so far, because the house still has to appraise for that if your lender is going to lend. They are not going to lend more than the property is worth as determined by a licensed appraiser. In that case, the seller will have to bring the price back down to appraised value or the buyer will have to bring in the cash to make up the difference.

We're seeing a lot of this going on where multiple offers are bringing the purchase price, not only well above asking, but above current market value. Feels kind of like it did when we were in an appreciating market. I wonder if we're bouncing off the bottom right now, or is it just a temporary ledge?

Anyway, hang in there. It's a great time to buy, and it seems like everyone now knows it.

Good luck.

Robert Vaughan, CSP
Broker/Owner
Success! eRealty
951.963.0163 ext. 1001
fax: 951.738.8889
info@successerealty.com
http://www.successerealty.com

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1 vote Thank Flag Link Sat Apr 25, 2009
Mike, The sold comparables for the area are what appraisers will use, not the pending! Don't worry about paying too much for a home, because when your lending institution orders the appraisal, if the home will not appraise for the amount of your offer because it is too high then the bank will have to lower their price, (to the appraised value).
Web Reference: http://www.soreal.biz
0 votes Thank Flag Link Wed Apr 29, 2009
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